The South Korean government is mulling measures to curb housing demand in certain areas in the country that have seen a rise in housing prices and subscriptions.

An official at the Ministry of Land, Infrastructure and Transport said Sunday that housing prices in areas where buildings are re-built, including Gangnam District in southern Seoul, have been soaring sharply driven by oversubscription of apartments.

He added, if this alarming trend spreads into other areas, it would weigh heavily on households and the economy as a whole.

In response, the government is considering to increase the ban period – currently six months – on resale of new house ownership rights and revive the rule to ban re-bid for other apartments once a bidder wins rights to certain apartment.

According to Korea Appraisal Board, prices in apartments in Gangnam rose 1.09 percent in June, 0.83 percent, 0.76 percent in July and August, respectively, and 0.93 last month. The rate of growth is faster than that of consumer price index released by the Statistics of Korea during the same period – 0.8 percent in June, 0.7 percent in July, 0.4 percent in August and 1.2 percent in September – except for September.

Korea Housing Finance Corp. will, except for few poorer households, technically halt offering “Bogeumjari Loan” – low-interest home mortgage loan with 10-, 15-, 20- or 30-year maturity – as of the year-end.

Even for those who are eligible to apply for the loan, the policy will become tighter as the price of houses, collaterals, would be cut from 900 million ($794,000) threshold to 300 million won threshold. Given the average sales price of an apartment in Seoul as of August, this would limit anyone who may want to purchase apartment with a floor size of 60 square meters in Seoul or other metropolitan areas.

By Moon Ji-woong and Kim Hyo-sung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]